MANILA, Philippines - Five foreign banks, three of them based in the United States, and two in Europe, that were earning money in the Philippines closed their offices and sold their assets to raise more funds for their financially problematic main offices abroad, a local paper said.The California-based Union Bank of California N.A.; the Dakota-based First International Bank; the US-based American Express Bank; the Paris-based Societe General; and Belgium’s offshore Fortis Bank, a subsidiary of BNP Paribas were engaged in the profitable business of foreign-exchange lending in the Philippines, Central Bank of the Philippines’ Deputy Governor Nestor Espenilla Jr. told the Inquirer.
- According to Espenilla, the head of one of the five foreign banks told me he was sad about closing the bank’s Philippine office because it was actually making money, but their parent firms needed more resources.
- At the same time, the Philippine banking sector was not affected by the closure of the five foreign banks because the latter represented “insignificant portion” of the Philippine banking sector’s total assets, said Espenilla, adding that many Philippine-based universal and commercial banks can adequately supply the loans and other financial services rendered by the closed five foreign banks.
- Their closure in the Philippines was a case of deleveraging, a trend that is now happening in banks that need more capital because of the higher capitalisation rules imposed by regulatory bodies in the United States and Europe, explained Espenilla.
Newly imposed tighter capitalisation was meant to correct unsound investment banking practices in the West that were uncovered before the West’s financial meltdown in 2008, said Espenilla, adding that banks abroad were now imposed to capitalise risky investments .Espenilla did not disclose how the assets of the foreign banks were sold.
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